Correlation Between ProShares Ultra and GraniteShares ETF

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and GraniteShares ETF at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ProShares Ultra and GraniteShares ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Ultra SP500 and GraniteShares ETF Trust, you can compare the effects of market volatilities on ProShares Ultra and GraniteShares ETF and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ProShares Ultra with a short position of GraniteShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and GraniteShares ETF.

Diversification Opportunities for ProShares Ultra and GraniteShares ETF

0.74

Correlation Coefficient

ProShares Ultra  GraniteShares ETF

Poor diversification

The 3 months correlation between ProShares and GraniteShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra SP500 and GraniteShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares ETF Trust and ProShares Ultra is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ProShares Ultra SP500 are associated (or correlated) with GraniteShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares ETF Trust has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and GraniteShares ETF go up and down completely randomly.

Pair Corralation between ProShares Ultra and GraniteShares ETF

Considering the 90-day investment horizon ProShares Ultra is expected to generate 5.68 times less return on investment than GraniteShares ETF. But when comparing it to its historical volatility, ProShares Ultra SP500 is 5.88 times less risky than GraniteShares ETF. It trades about 0.09 of its potential returns per unit of risk. GraniteShares ETF Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  692.00  in GraniteShares ETF Trust on August 26, 2024 and sell it today you would earn a total of  5,042  from holding GraniteShares ETF Trust or generate 728.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ProShares Ultra SP500  vs.  GraniteShares ETF Trust

ProShares Ultra SP500

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra SP500 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in December 2024.

GraniteShares ETF Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares ETF Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, GraniteShares ETF disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and GraniteShares ETF

The main advantage of trading using opposite ProShares Ultra and GraniteShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, GraniteShares ETF can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GraniteShares ETF will offset losses from the drop in GraniteShares ETF's long position.

The idea behind ProShares Ultra SP500 and GraniteShares ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.